Zcash to sovereign rollup

Technology
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Spoiler Alert:
There will Never be a Perfect, Obvious Solution

This is why we ought to be practical, and rational. In spite of its ups and downs, Ethereum is far and away the most battle tested, most trusted, organically used, and most dynamic programmable base layer in crypto.

I’ve never been, and until convincing evidence of the contrary shows up, a dreamer in “Ethereum Killers”

Ethereum has massive first mover advantages similar to Bitcoin, that will give it outsized likelihoods to continue to remain prominent.

Speculating Zcash atop an experimental ETH killer chain seems like high risk that isn’t worth the thought exercise.

Namada, Penumbra, Cosmos, PolkaDot, Cardano, Solana, you name it - it’s a traveling circus just like all of the attempted “Bitcoin Killers”

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43

Btw someone texted me a great idea that builds on this!

You could have Zcash verify settlement for a layer 2 that uses a more performant DA (e.g. Celestia via Namada) and an alternative shared sequencer for improved interop amongst other rollups!

These are known as “Validiums” in Ethereum. Not as secure as rollups, but still awesome solutions that might help scale payments.

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I don’t think it won’t happen. Zcash reminds me of a kind of poker puzzle. We don’t see most of the pieces for a long time, then they come from somewhere and bang, you have a complete set.

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this is a true zcasher view.

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I agree we need more open verbal discussion.

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Good writeup @januszgrze. Coincidentally, I have been thinking along similar lines recently. The topic has been on my mind because of my rollup research and because of the ongoing work to transition Zcash from PoW to PoS.

I am generally supportive of the idea of Zcash transitioning to be a rollup rather than an independent PoS chain. I think it’s going to be hard for Zcash to compete as an independent chain when we have shielded rollups like Aztec coming online that are much closer to a much larger ecosystem (Ethereum). Transitioning to a rollup would level the playing field, making the competition less about proximity to existing users, apps, and large pools of liquidity and more about features, performance, culture, vibes, etc. It’s like building an app and competing with other apps vs building a separate internet and trying to compete with the internet. I know which I’d rather do.

Taking the decision to transition to a rollup as a given, for me the key questions are: which rollup model, sovereign rollup or smart contract rollup? And rollup to which chain?

My preference would be for Zcash to transition to be a sovereign rollup on bitcoin with the long term goal of becoming a smart contract rollup on bitcoin once that capability exists. I’ll break each part of this down and explain my rationale for these choices.

The decision to do a sovereign vs smart contract rollup basically comes down to: do we want the Zcash rollup to have a trustless bridge to its parent chain? I say “yes”, which implies becoming a smart contract rollup. The benefits of trustless access to assets with much more liquidity and much larger user bases than what Zcash has today are hard to overstate. And the risk to Zcash sovereignty is not as great as one might initially think.

In your post, you state:

But this is not true! First, it should be noted that smart contract rollups can have immutable contracts. Uniswap, a popular DEX on Ethereum, uses immutable contracts. Every time there’s a new contract version, the Uniswap developers simply deploy the new contracts and let users know that they can move their liquidity over if they want to, or remain on the previous Uniswap version if that’s their preference. A smart contract rollup can do the same. This is not unlike the transition between shielded pool versions that Zcash has gone through several times.

Additionally, even when smart contract rollups have mutable smart contracts (which remain trustless in best case scenarios but degrade to less-than-trustless in worst case scenarios) users don’t necessarily lose all sovereignty. For example, a time delay could be added to updates to give users time to withdraw their funds from the rollup if they disagree with the new proposed smart contract version. This is similar to the way Zcash hard forks have been activated, where a hard fork full node client is published with a block height set to activate the new consensus rules some time in the future.

Going back to my question: do we want the Zcash rollup to have a trustless bridge to its parent chain? If we answer “no”, which implies a sovereign rollup, then we are deciding that any bridges between Zcash and other blockchains (aside from smart contract rollups built on Zcash) will be strictly less-than-trustless. Basically, all bridges would be at best secured by fancy k-of-n multisigs with a large N-sized signer set. I believe Zcash users deserve better; smart contract rollup it is!

Now we turn to the question of “rollup to which chain?” Earlier I said my preference is for Zcash to be a sovereign rollup on bitcoin, with the goal of becoming a smart contract rollup once that capability exists. First I’ll explain why bitcoin then discuss this transition from sovereign to smart contract rollup.

The decision about which chain to rollup to boils down to: which chain is most likely to be the foundational chain of the future economy? Here’s how I think through this question:

First, I think there’s a fundamental values question to answer. Do we have any strong opinions about what mechanism should be used for securing the chain against Sybil attacks? For reasons I have explained elsewhere, I believe PoW is the best basis for the security of the monetary system. I understand not everyone in the Zcash community agrees, hence the push for transitioning to PoS. In part I hope this discussion about transitioning to a rollup can help us reverse (or more accurately, augment) this decision which I see as a mistake. But I digress.

If we accept that PoW is the best basis for the security of the monetary system, then we can refine our earlier question: which PoW chain is most likely to be the foundational chain of the future economy? To answer this we should evaluate the different options on the basis of criteria such as history, current traction and network effects (users, liquidity, tooling etc), and inertia (potential and trajectory of future growth). This leads me to bitcoin.

Now to return to the idea of starting as a sovereign rollup on bitcoin and transitioning to a smart contract rollup on bitcoin. Currently, bitcoin cannot support smart contract rollups. Research is ongoing into how that could change to enable either optimistic rollups or validity (zk) rollups, or both. Based on conversations I’ve had with many devs, entrepreneurs, and users in the community, there seems to be wide support for this among those who understand it. The main questions seem to be around timing and implementation details – a matter of when, not if. That said, until we get the necessary opcodes to support smart contract rollups on bitcoin, the best we can do is a sovereign rollup.

But even as a sovereign rollup on bitcoin, Zcash gains a lot:

  • Double-spend resistance and DA guarantees equivalent to the bitcoin mainchain
  • Closer connection to bitcoin, which could help grow the Zcash userbase and developer community
  • Operational experience and understanding of what is required to run a rollup on bitcoin, which will ease the transition to a smart contract rollup if/when that becomes possible

So I think it would still be worth the effort to start as a sovereign rollup now, even though the long term goal is to become a smart contract rollup on bitcoin.

The elephant in the room

Regardless of whether we’re talking about sovereign rollups or smart contract rollups, a question that one might have when considering using bitcoin as the DA layer for a rollup is: what happens when we hit the bitcoin block size limit? Bitcoin blocks are already mostly full most of the time, so this question is not theoretical. Competition for block space will only become fiercer once rollups enter the picture. Here I see multiple options, and they’re not necessarily mutually exclusive:

  • Increase the bitcoin block size limit (this would require a bitcoin soft fork)
  • Add EIP-4844-like data blobs to bitcoin (this on its own would be less resource intensive than a block size limit increase, but still require a soft fork)
  • Use a zkPorter-like offchain DA protocol, with ZEC as the staking asset (this would not require a soft fork)

The other elephant in the room

So far I haven’t said anything about what the fee asset of the Zcash rollup should be. My preference would be for the fee asset to either be BTC or to be left undefined, so users can pay whatever the rollup block producers are willing to accept. Bitcoin users already use BTC to pay mining fees so it will make it easier for them to use a rollup built on bitcoin if they can also pay fees to the rollup block producers using BTC. But as I said, I am also supportive of leaving the option open for users and block producers to converge on whatever asset(s) they want for paying fees.

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Somewhere I’ve seen this exact same topics in a different wrapper.

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Hello again, after 3 years another attempt. For some reason I immediately realized where this topic is coming from.

Look, I just want to say, even though you are smart people, resourceful and enterprising, Zcash will not die in L1.

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Absolutely. Someone thinks that Zcash is on its way to the scaffold and will throw itself into the arms of anyone who offers to steal it from the executioner. It’s a funny situation.

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Cosmos and Polkadot bridges are not trustless, unless as with smart contract rollups you’re willing to give up independence. If the Zcash community decides that having “independence” is more important than having a trustless bridge, that is certainly a valid tradeoff to make. But one of the things I wanted to make clear in my post was that this is a fundamental tradeoff, and imo one of the most important tradeoffs to consider.

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I am not saying Zcash will die in L1. It is very hard to kill a cryptocurrency. But there’s a wide spectrum of existence between “huge success” and “death”. I want to see Zcash be closer to the “huge success” end of the spectrum. My current prognosis is that Zcash is somewhere closer to “death”, although still closer to the halfway point. See also Paul Graham “default alive or default dead” framework.

I do think that proponents of continuing as an independent L1 have a difficult task justifying that path as shielded rollups emerge in much larger ecosystems. My questions to you are, how do you expect Zcash to compete with a shielded rollup on bitcoin or Ethereum? What is the pitch to get people to buy ZEC (which has much less liquidity than BTC or ETH) or to use a trusted bridged version of BTC or ETH on Zcash, rather than using a trustless shielded BTC on bitcoin or trustless shielded ETH on Ethereum?

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Isnt ZEC as a token for spending what is dead? Its the blockchain that has value (??). Without the blockchain, ZEC as a standalone privacy coin is worthless. If its not, why should it have any value?

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After 15 years of trying , Bitcoin has failed to achieve what is was set out to achieve: - Hardly anyone uses it to buy groceries or fill up their tank.

If this was any other coin, project, tech, traditional business, government, it would have been deemed a failure long ago.

Zcash is going to try one more time. Maybe we can learn from Bitcoin’s mistakes and use its history as a blueprint on how to navigate difficult decisions.

Zcash will remain sovereign.

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If Zcash became a rollup, the Zcash blockchain would continue to exist and function, it would just rollup to another chain rather than exist independently. In the OP @januszgrze outlined several ways that ZEC could retain value even if Zcash became a rollup.

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Amen to these rhetoricals. They’re what we all need to be thinking deeply about. I’m also of the opinion that Zcash has the best chance to succeed as a bolt-on to some prominent, widely used-known L1, rather than entrenching itself as its own sparsely used-known L1.

Trivial commercial transactions are only the sales pitch. Anyone serious and aware knows that Bitcoin is for long term investing/ store of value/ growth of value. The trivial transactions just serve to get people’s imaginations churned up about the long term value proposition.

Only a fool would buy 1 bitcoin today, and then spend it to purchase a nice vehicle. The car will deteriorate in value over a decade, whereas BTC will surely at least double or triple in value. This hypothetical demonstrates why the vehicle buyer is best served to simply spend fiat directly - no need to take on the complexity of BTC trade/ transaction/ tax implications.

Scarce digital assets are designed to increase in value, they’re intended to trade with volatility, they’re designed to gain value over time, they’re not designed for trivial commerce.

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The topic here is about Zcash becoming a “sovereign” rollup :grin: and as I mentioned here I think the implications for sovereignty when operating as a smart contract rollup are more nuanced than people usually explain it.

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You basically want to turn us into another zkSync :joy:.

Our entire unique selling point is premised on being one of the only prominent L1 private blockchains. It’s literally what gives us our clout.

It’s beyond the bounds of believability that we’ll even be taken serious by our own community let alone others if we make such a weak move - capitulation. This discussion is a distraction as far as I’m concerned.

Plus its disrespectful to our heritage, heroes and developers that this is even being discussed. If anything, I’d like to hear it from them. Someone from ECC or ZF (thank you @Dodger for speaking up and stating the obvious).

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This is your imagination and every Bitcoiners imagination speaking: group think. This is a recent phenomenon (since 2017 bull run mainly). Bitcoin was used as a currency AS INTENDED in its early days (Silk Road). Give it a few years and maybe the aura behind BTC will evolve into being some form of an NFT or collectible considering it’s not fungible.

Regardless, Satoshi Nakamoto and the Bitcoin white paper differ with your interpretation of Bitcoin and everyone else that’s hoarding it hoping it goes up in value so they can get more FIAT :man_facepalming:t2:.

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on BTC there is already a layer for smartcontracts and even a defi like market. it is on OMNI blockchain.
Zcash should build it’s own smartContracts onchain based with anonimity and dex.
Why do you want to mix zcash with…eth or btc?
and yes pow is the answer.
let us see tokens launched on zcash blockchain…like on eth blockchain…is it that hard to implement…after that you can see how to link with other chains

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I’m not making interpretations. I’m talking about what is happening in reality in 2024, and what reality has shown us in the past few years (both on-chain, and off-chain).

People Buy and Hold Bitcoin with one primary purpose. To store value over time, and then when desired they recapture that value (+coverage of inflation, and some additional capital interest).

Hearkening back to the White Paper and the oldest bitcointalk forum themes about making a decentralized fiat-like digital currency doesn’t square into the reality of today.

Amazon started as a Book seller, Look at it Today. It is more than selling books now.

Bitcoin is the exact same, it has grown completely beyond the oldest themes that helped it grow from 0 to 1.

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